Founder and CEO of GDR Creative Intelligence, Kate Ancketill has consulted on best practice and strategy in retail, brands and hospitality for 20 years, working with clients like Microsoft, Coca-Cola, P&G, Hilton and Tesco. ‘Innovation almost always starts with cross fertilisation’ says Ancketill. ‘Looking outside of your sector and geography at non-competitors is far more likely to lead to disruptive breakthroughs than can be achieved by chasing your competitors’.
Purposeful Retail is the strategy where a brand or retailer’s values and actions create and accelerate positive change that benefits society and the planet; in effect their commercial remit is bigger than merely drawing profit from transactions.
In a commercial climate with substantial pressures, such as the hollowing out of the middle class, oversupply, low consumer demand and low-price, fast serve and e-commerce, companies need meaningful and consumer-relevant purpose to have any kind of long-term future. Certainly, there will be immediate practical issues that are essential for short- or medium-term survival, but longevity requires meaningful connections between a brand and its current and future customers — and purpose can be a substantive and defendable means to create and deliver that meaning, embedding it in the brand.
This need for purpose is amplified by the increasing social awareness, issue engagement and politicisation of consumers. These consumers are responding to the complexities of living in uncertain and challenging times. Brands, systems or institutions that demonstrate similar values and attitudes, that align in purpose with their customers, become useful and necessary beacons in this fragile landscape of stressed lifestyles. Shared purpose also makes a brand more resilient to short-term pressures, as their customers are with them, supportive and emotionally invested, rather than simply viewing the relationship as a superficial cost-value transaction. A relationship based on a price-focused shopper is not sustainable; that customer is fickle by definition. A relationship based on shared values means the brand and shopper have an interest in mutual success. We can see that when a much-loved brand fails or pivots away from its old path, destroying years of built up trust, lifetime customer value and other shopper equity. Customers feel abandoned or betrayed.
A 2017 study from Cone Communications found 71% of US millennials expect “that companies will take the lead in bringing about societal changes”. Purposeful Retail is not a response to change, but should be the change people require, to adapt Gandhi’s “Be the change that you wish to see in the world”.
Purpose today needs to have substance. We’ve moved beyond a time where CSR is a small percentage, a four-page image-rich boast in the annual report. In the same way a brand’s identity needs to move from the superficial manual of colours, logos and applications to a definition of attitude, a brand’s purpose needs to be fundamental and active throughout every aspect of the business, not isolated in one easily managed section, while the rest of the company ignores it.
It may seem obvious, but it needs to be said that purpose has to be brand specific. There isn’t a suite of options that a brand can select from and apply with ease. Purpose, like attitude, needs to be fundamental, genuine and authentic. How a brand or retailer defines its purpose combines self-examination with understanding stakeholders, customers, the market, and the larger context the brand occupies. The brand should relate to these external factors in a way that is consistent with its core brand values, and anything that is subsequently implemented will inevitably use the internal systems and philosophies of the brand organisation. How P&G, Clorox and Unilever respond and act on an identical situation will vary, as their means of perception, analysis and action are all different. A solution appropriate to one wouldn’t work so well for the other.
While theoretically there should be as many means to be a Purposeful Retailer as there are Purposeful Retailers, if we look at the general picture in America and Europe there are several common approaches. I don’t propose to list all of these, however there are three important trends that lie behind much of Purposeful Retail. These trends reflect the general principles mentioned and will grow in relevance and application in the future.
It’s well established that millennial and younger consumers expect and value openness from brands. Several factors contribute to this: social media and “no hiding place” citizen journalism, the open book approach favoured by many challenger direct-to-consumer vertical brands such as Everlane, brands using forms of participatory open innovation and the need to create authentic brand narratives with genuine content that differentiates and justifies a brand’s proposition and price. Additionally, some long established industries — fast fashion and beauty being examples — have had a very closed door, top-down approach to communication. “What are you hiding?” ask consumers, the spiritual offspring of Rachel Carson, Ralph Nader, Naomi Klein and George Monbiot. And in recent years it’s become apparent that a lot of unsavoury activities were being hidden: deforestation, child labour, slave labour, sexual harassment, designers being plagiarised, tax evasion and donations to political lobbies arguing for policies detrimental to the brand’s customer base.
Additionally, some brands were promoting social conscience or their charitable foundations, only for consumers to realise these were nominal actions at best. Is a fashion house that donates 10% of net profits to a foundation (controlled by the founders to distribute at will) truly a brand with a purpose? People are wising up to approaches that look more like tokenism and founder grandstanding.
Meaningful Transparency is a more fundamental approach. Not just making your supply chain, processes and values visible, but actually elevating the conditions of the workers above the industry norm. The minimum ethical requirement for any modern fashion brand is a basic understanding of social and environmental issues. They must be in compliance with local laws and regulations and have clear and transparent processes for auditing and improving their processes, but the future is bigger than that. Brands are expected to be the engines of change, not simply responding to the actions of others. Transparency has to be thought of as a positive strategy, for example as a platform for innovation. In an interview with Fast Company last year, Nike’s Chief Sustainability Officer, Hannah Jones said:
“The reframe that happened is that we stopped seeing sustainability and labour rights as a risk and burden [and instead] as a source of innovation. Whether it’s about women’s rights or sustainability or women in the supply chain, if you flip it to be about an innovation opportunity, people step into that space with less fear.”
Now brands are using transparency and intimate co-creation techniques to excite customers about their unique processes, ceding various degrees of control to their customers, be it through providing information that is typically confidential, or providing a product where the final configuration is finessed by the customers themselves. In some cases, the USP may be a radical alteration to a traditional manufacturing process; in others, it’s radical transparency in the supply chain. Part of this more porous approach is a relaxation in brands’ attitudes towards ownership of the final outcome, where the customer may influence the final 10–20% of the product at point of sale in personalised customisation.
Blockchain has the potential to deliver customer value and new opportunities to engage within the supply chain. It’s a technology that can deliver commercial efficiencies away from the consumer, but platforms such as provenance.org are demonstrating that this can form a whole new set of touchpoints to influence customer behavior.
Over a wide range of categories, brands are leveraging something that was often previously hidden, thereby elevating customer relationships.
Transparency is an overarching principle that extends beyond retail, but the second key trend is far more specific to physical retail, and retail stores in individual locations. Distributed Propositions are an enhanced form of localism, where the geographic or social context of a particular store is reflected in the store offer.
This isn’t about matching product assortment to local demand, though that may be part of it, but thinking of individual propositions, services or purpose that acknowledge, genuinely benefit or connect to a local community or micro-culture.
In a retail chain this implies variance of purpose across the estate, though within a framework of “universal purpose”. An example of this is Nike, who’s aiming to help build healthier, more active neighbourhoods and to be a catalyst for change through the opening of its Community Stores format. All Community Stores aim to hire at least 80% of store employees — known as store athletes — through local channels and from within a five-mile radius of the store. Store athletes must also show a commitment to volunteering their time to local non-profit organisations and are given the opportunity to award grants from Nike to local causes that promote sport and wellbeing.
As a principle this has a lot of flexibility. It can be a core value built into the brand, such as a corporate commitment to hire the disadvantaged, or something that happens occasionally, like Sainsbury’s weekly Slow Shopping session to help elderly and vulnerable people. Two hours every Tuesday, the supermarket in Gosforth, near Newcastle, introduces measures to make the experience less stressful to help people with “visible, invisible or intellectual disabilities who may find shopping stressful or challenging”. As with an elderly shopper focused initiative by Kaiser in Germany some years ago, thinking about a specific group often has wider benefits for the whole customer base and results in increased total footfall.
Modifying a retail proposition to genuinely benefit or connect with a local need is not actually difficult to do. UK cafe chain Costa has rolled out the Chatty Cafe scheme — an independent initiative that tackles loneliness — to more than 300 of its branches across the country. It’s simply setting aside space for people to sit down and talk to other customers about anything they feel like talking about.
Central to these initiatives is a more flexible and empathetic understanding of local customers and their situation, and working less with synthetic models of consumer types and behaviours.
Local connections have always been part of the service provided by many independent retailers that are integral to their communities, now we’re seeing larger organisations understanding, appreciating and incorporating services that validate and dignify local places, local people and local values.
The final principle is probably the most radical, as in its most extreme execution it requires structural transformation that delivers a discontinuous step change that redefines the category.
Any meaningful purpose needs to recognise a goal or vision. Fundamental Reconfiguration recognises that achieving that vision is not possible through the current ways of doing. The product, service or retail system needs to be changed to achieve breakthrough and the objective.
For Purposeful Retail this can imply a whole new form of retail, with associated changes in supply chain, display, information delivery and shopper behaviour. An example would be the new package-free stores from LUSH in Milan and Manchester. Eliminating packaging has less impact on Lush’s product range than it would for The Body Shop, but nevertheless it removes a customer communication touchpoint, and in response the retailer has trialled an augmented reality app, known as Lush Lens, which allows customers to find out additional information about products by using a provided Fairphone. The store makes a strong statement about the brand’s sustainability focus, but more powerful is the intentional layer of friction the removal of packaging has added. It causes shoppers to physically alter how they shop, forcing them to acknowledge, and hopefully appreciate, the brand’s eco-friendly credentials.
One aspect of this type of fundamental shift is that it can make a customer reappraise the competitor’s offer. What had been normal practice now seems outdated, wasteful or antithetical to the realised purpose.
A less dramatic example of this reappraisal of core principles is the slow movement. The values at the heart of the slow food movement — Good, Clean, Fair — are purposeful principles that can be found today in other categories reacting against fast, cheap and meaningless brands that are simply there to be consumed — destructive, exploitative and ephemeral. Thinking with a slow mindset changes the way an apparel brand delivers long-term value. A brand like Barbour acknowledges their garments get handed down from generation to generation, and supports longevity through repair, as does Private White VC, who are transparent about pricing, source 90% of their materials within 40 miles of the factory and simply state:
“Unusually, for a clothing company, we don’t want you to keep buying from us. Or at least, we hope you don’t feel the need to. Why? Well it’s because we make our garments to last a lifetime, and if they don’t, we’re here to fix it, or refurbish it.”
However, it’s the brands that are tearing up the rules and creating whole new paradigms that are the most interesting. They demonstrate the full potential in a radial sense of purpose that ignores or discards the conventional model. In apparel, it might be Y Closet, the Chinese start-up that moves your entire wardrobe to a rental model. In laundry it’s Tide creating a laundry ecosystem: with the slogan “Life over Laundry”, Tide Spin is an app-based system that takes care of all laundry and repair needs. Another radical approach from P&G is DS3, a breakthrough technology that eliminates water from the final cleaning product, removing 80% weight, 70% space, and 75% emissions. The bottle of detergent or hand soap is now a box of liquid-free swatches. It’s products like these, and the multi-brand package reuse scheme Loop that will transform future retail in certain categories. As TerraCycle CEO Tom Szaky said at Davos this year: “Loop creates a new way to more responsibly consume products [that] will not just eliminate the idea of packaging waste, but greatly improve the product experience and the convenience in how we shop”.
How will the future look?
Purpose must become more robust: brands in the future will no longer be able to get away with superficial ideas of sustainability or social engagement, and will have to engage in a genuine, defendable and meaningful way. There are still too many dirty secrets in the commercial world; many are dressed up as positives when actually they damage the planet and consumers lives. The use of rPET in polyester clothing, for example: these garments contribute substantially to microplastic pollution in waterways and oceans, though are touted as a sustainable initiative.
Transparency, localism, discontinuity: these three themes will power much of Purposeful Retail in the future. Of the three, the most powerful is discontinuous change — it is difficult to achieve, but it’s the radical alternative that will genuinely deliver meaningful results. Is that more difficult than being properly transparent? It’s difficult to say; but being truly transparent in the modern world means companies have to act properly, and to the values of the public. Be fake, and you’ll be punished.